CASH VS. CARE

The invasion of for-profit health care entities into Chicago begs the question of the relative merits of for-profit vs. not-for-profit health care delivey. The recent sale of Grant Hospital to the for-profit conglomerate Columbia Health care Corp. puts this debate once again in the forefront.

Unfortunately, the Grant deal further opens the door to Columbia, a corporation boasting that it will soon acquire an additional 10 Chicago-area health facilities and then close some to improve the corporation's profitability.

It is unclear that maximizing the shareholder value-the primary goal of publicly traded corporations-is consistent with maximizing the benefits that a community hospital provides to local residents.

I believe that the non-profit approach to health care delivery effectively balances the interest of the stakeholders of the community hospital-the patients, physicians, employees and the community at large. It remains to be seen whether the for-profit, investor-owned, publicly traded companies can deliver better health care to the communities they serve.

According to the American Hospital Assn., in 1991, approximately 14% of the nation's 6,000 hospitals were operated as for-profit institutions. Despite the influx of proprietary hospitals over the last 20 years, there is an appalling lack of research on how they stack up against their not-for-profit predecessors.

The few studies that exist point to the fact that not-for-profit hospitals deliver better, more accessible care at a better price.

A 1989 study published in the New England Journal of Medicine provided some information about the quality of care in different types of hospitals. Using 1986 Health Care Financing Administration hospital mortality rates from 3,100 hospitals, the study found that mortality rates were significantly lower in private teaching hospitals (108 per 1,000) than in for-profit hospitals (121 per 1,000).

In 1991, Health Care Management Review analyzed efficiency and profitability for 50 for-profit and 60 not-for-profit hospitals in Florida from 1982 through 1988.

According to its findings, not-for-profit hospitals pay better wages and have higher staffing levels, which contribute to the quality of care but lend themselves to lower operating margins.

In January 1992, another New England Journal of Medicine study looked at the efficiency of 160 for-profit and not-for-profit hospitals during 1978 and 1980. The researchers concluded that the for-profit institutions generated higher profits through "aggressive pricing," not through greater efficiency.

A Modern Healthcare magazine article concluded that "as recently as 1991, for-profit hospital companies' median gross charges were 11% higher than tax-exempt hospitals' (charges) in the same markets."

Further evidence points to the fact that not-for-profit-hospitals take their mission to heart by providing health care services to those in need.

Some would say that the current wave of mergers and acquisitions by publicly traded hospital companies are in response to health care reform and will lead to higher-quality, more cost-effective health care. But the evidence indicates that Columbia's aggressive plan for hospital acquisition in the Chicago area may result in improved economic return to Columbia's shareholders but could reduce both access to and comprehensiveness of local community health care service.

Lee Domanico is CEO of Columbus-Cabrini Medical Center, a non-profit hospital on the North Side.